Analysis & Opinion

PARIS, March 20 (Reuters) - Vivendi is considering
splitting off its biggest unit, French mobile telecoms operator
SFR, and putting a chunk of the group's debt into the
subsidiary, Bloomberg said on its news website on Wednesday.

Shares in Vivendi closed up 4.4 percent at 16.22 euros
following the report, which said no final decision had been made
and Vivendi could still opt for an alternative strategy.

A company spokesman declined to comment on the report.
"Vivendi is interested in maximising value for SFR and at this
stage any other speculation would be very premature," he said.

Vivendi has been in the midst of a portfolio review and
strategy revamp, saying it wants to reduce exposure to
capital-intensive, mature telecoms businesses to focus more on
its media activities in music and pay-TV.

But it has already unsuccesfully tried to sell its Brazilian
telecom unit GVT and its 61 percent stake in video game business
Activision Blizzard and is still working on the sale of
its 53 percent stake in Maroc Telecom.

The question of what to do with SFR, which accounts for
about 40 percent of Vivedi's group sales, is more complicated.
There are no obvious strategic buyers for the asset and a merger
with another French mobile operator has essentially been ruled
out for now by competition regulators.

France's telecom market is also in the throes of a price war
sparked by new mobile player Iliad, which has pushed
valuations lower and complicated any possible deal-making.

A spin-off of SFR would mark a reversal of strategy for
Vivendi, which in April 2011 bought out SFR's co-owner Vodafone
, paying 7.95 billion euros for the UK company's 44
percent stake.

Vivendi has in the past held talks with French cable
operator Numericable over a tie-up with SFR but they foundered
over valuation issues and deal structure, sources earlier told
Reuters. SFR is also eyeing options for network sharing deals to
reduce capital expenditures including with Bouygues Telecom
.

The group is expected to give an update on its strategy at
its annual shareholders' meeting on April 30.